....© 2000, Kimit A. Muston
I wonder how many people remember the L.A.River Freeway? I had almost forgotten about it. What reminded me of it was George Walker Bush, governor of Texas and Presidential candidate talking about Social Security. "G.W." has suggested that we save the Social Security System by letting individuals invest their retirement money in the stock market.
Now, the first thought I had was not the infamous L.A.River Freeway, but rather a company out in Indiana called Conseco, which is that rare of rare creatures, an Internet company that actually makes a profit. And boy are they in trouble!
A couple of years ago Conseco gave loans to their upper level employees who used the money to buy company stock at guaranteed prices. It was way of keeping talented people in a tight job market. The loans are due at the end of May, and the company stands to lose about half a billion dollars because the stock is no longer worth what the employees borrowed to pay for it. The employees can't afford to pay back the loans, and the company can't afford to force them to pay.
Remember, we're in the middle of the biggest bull market in world history. Conseco is run by some of the smartest business brains in the world, who have made Conseco one of the biggest successes in the world. But those smart business types are the same people who got the company into this mess. And the bull market hasn't ended. It's just suffered a "correction".
So Conseco is going to have to pass on the $500 million dollars in losses to their stockholders, who, if Mr. Bush has his way, will someday be folks about to retire on their suddenly evaporated social security. Now, this story doesn't surprise me. I don't trust Wall Street. The first man I ever met who made money in the market was a neighbor who was getting ready to move to a bigger house because he'd made a fortune in stocks. I had some money and I explained to him that I wanted to invest in a "sure thing." Could he give me some advice? My neighbor explained that there is no such thing as a "sure thing", not in horse racing and not on Wall Street. "Only invest money you can afford to lose", he said. And then he explained that his current wealth was the third fortune he had made on Wall street. He'd lost the first two in the same place.
Which brings me to the infamous L.A.River Freeway. If you don't remember it, don't worry. It never got built. It was the brainchild of a L.A. Councilman who was stuck in traffic one day on the southbound 5 and looked out his window at the empty open expanse of the L.A. River. Why not build a new freeway there, he wondered. We already own the land. We won't have to tear down any buildings. We'll just pave over the top of the river and put in another twelve lanes of road and unclog the freeways!
It seemed like a great idea at the time. We were in the third year of a drought, the river was bone dry and looked like it was going to stay bone dry forever. But the very next year the clouds opened up, the river filled to overflowing, and helicopters had to pluck people from their cars in a flooded Sepulivada basin and that was the end of the L.A.River freeway. The lesson here was, "Sooner or later it always rains."
I wonder if anybody ever told G.W. about the L.A.River Freeway, or even Conseco. Put them together and I come away with the feeling that allowing people to play monopoly with their social security money invites the creation of a new population of homeless people in America, over the age of 65, who invested what they could not afford to lose, and who believed it was never going to rain again.
Kimit A.Muston is a writer living in North Hollywood. His work may be also be read in the Los Angeles Times